In 2019, Bitcoin Banco Group, a brokerage firm which promised investors high returns on investment, ran into trouble, following several complaints from investors that could not place withdrawal requests on the platform. The company claimed that it was hacked and as a result, could not meet its obligations. Investors reported the case to the Federal police in Brazil and investigations commenced on the embattled company.
Oliveira and the Bitcoin Banco Group failed to provide evidence of the hack, which led to further suspicion. The alleged hack forced the firm to file for judicial recovery, a Brazilian law that shields bankrupt companies from creditors, allowing them to restructure debts, renegotiate and plan towards fulfilling their obligations to creditors. While in this phase, it was reported that Bitcoin Banco Group sidelined court instructions and continued to operate and even solicit for new investors.
Investigations revealed that the missing 7000 BTC were diverted to Oliveira’s personal wallets, prompting the federal police to make the arrest. The authorities also seized luxury cars and cash found in his possession. Claudio Oliveira will face trial for charges bordering on money laundering and fraud which affected around 20,000 investors.
Other Exchange Owners Face Fraud Charges
Korea times reported that top executives of Bithumb exchange may face trial in Hong Kong over a 100 billion won ($87,000,000) lawsuit filed by its Thai partners. Bithumb owner, Lee Jung Hoon allegedly received the aforementioned amount to facilitate the development and listing of BXA coins in Thailand after making a proposal which involved Bithumb launching in other countries. The deal fell apart eventually, causing complainants to believe that Lee Jung Hoon and Bithumb had ulterior motives for the deal.
In what may be one of the biggest cryptocurrency scams, two South African brothers and founders of Africrypt exchange, Ameer and Raess Cajee told investors that the platform was hacked and that the company suffered losses. Lawyers of disgruntled customers said last month that about $3.6 billion went missing from the exchange. The whereabouts of the brothers remain unknown and attempts to reach them proved futile.
The Ongoing Fight Against Scams
Along with increased price and utility, cryptocurrency fraud cases have skyrocketed, with pump and dump schemes, hacks and fraudulent investment schemes proving to be a rampant menace in the space. A Forbes report showed that more than 80,000 cryptocurrency related scams were reported in the United States, representing more than 24,000% of the figure from 2016. In the wake of the growing count and widespread acceptance of cryptocurrencies as an asset class, authorities have relentlessly worked to decipher new methods to curb fraud in the space. An important win was scored when the US authorities managed to recover about 63.7 out of the 74 BTC (worth $4.4 million at the time) ransom paid to hackers responsible for the Colonial Pipeline attack.